Good morning, and welcome to the OreCorp Investor Webinar and conference call. All attendees are in a listen-only mode. If you would like to ask a question directly to the company, please use the Raise Hand function within Zoom. For those phoning in, dial star nine. Alternatively, you can enter into the Q&A panel within Zoom. I'll now hand over to OreCorp Executive Chairman, Matthew Yates. Go ahead, Matthew.
Thank you, Nathan. Good morning, everyone. I'd like just to bring your attention to the cautionary statements on the screen in front of you. These cover both Canadian and Australian compliance. I'll take those as read, or you can find them in this presentation, which has been platformed or on our respective websites. Thank you very much for joining us today for this webinar to discuss the proposed acquisition of OreCorp Limited by Silvercorp Metals, Incorporated, as was announced on the ASX earlier. I'm excited to speak to you about this transaction. This is transformational for our company and aims to create a diversified, highly profitable precious metals producer. Silvercorp is a TSX and NYSE-listed Canadian-based mining company, producing silver, lead, zinc, and gold, with a long operating history spanning over 20 years.
In the past financial years, it has achieved more than CAD 200 in revenue and an operational cash flow of more than CAD 85 million, demonstrating excellent profitability. With the backing of Silvercorp's balance sheet strength, the transaction will allow us, with a combined entity, to pursue opportunities for optimization, fund construction, aggressive exploration at a world-class Nyanzaga Gold Project. Development is planned to continue in line with our original expectations, delivering commercial gold production in the second half of 2025. Silvercorp's strong technical team will be an asset to the development of Nyanzaga, and we are excited of the opportunity on how now to move it forward with the funding risk largely mitigated through the opportunity for OreCorp and its shareholders.
Tanzania is an exciting mining jurisdiction, and the combined entity will have exposure to this, which could build further as we continue aggressive exploration at Nyanzaga to expand its resource base, with a stronger cash position in which to pursue this growth opportunity. The combined entity, at the conclusion of the scheme, will have a pro forma market cap of around about $630 million. That's AUD 960 today, so just short of $1 billion. This will enable OreCorp and Silvercorp shareholders to participate from a larger company, with greater access to capital, significantly higher liquidity, and increased scale and enhanced capital markets relevance. If Silvercorp is admitted to the ASX, the combined entity will ultimately be listed on three exchanges. Silvercorp's offer to its shareholders is an implied value of AUD 0.60 per share.
This is just under 42% premium on the 20-day VWAP, and values OreCorp at approximately AUD 242 million. This presents an excellent opportunity for a rewrite now, as well as the... when this transaction completes, and also upon the successful development of Nyanzaga. Existing shareholders in OreCorp will ultimately own just under 18% of Silvercorp's common shares on issue following the implementation of the scheme. The consideration preserves Silvercorp's strong balance sheet and allowing funds to be deployed into the development of Nyanzaga, mitigating risk and optimizing future opportunities, which it could also include regional M&A. This is a great and wonderful opportunity for OreCorp to become part of a larger, well-funded precious metals producer and unlock value from our Nyanzaga project.
I'm now going to hand over to OreCorp's CEO and Managing Director, Henk Diederichs, and Silvercorp Vice President, Lon Shaver, as we join hands across the ocean and time zones to provide you a more detailed overview of the proposed transaction. Over to you, Henk, and thank you.
Thank you, Matt, and, good morning to all. I'll just briefly take you through the transaction details. The Silvercorp offer is by means of a scheme of arrangement. The offer is for a total implied consideration of AUD 0.60 per OreCorp share, comprising of AUD 0.15 in cash, and then 0.0967 common Silvercorp shares for each OreCorp share. It does represent a 41.7% premium to the 20-day VWAP of the OreCorp share price. Implied a fully diluted in-the-money equity value of AUD 242 million. Post the transaction, Silvercorp shareholders will hold 82.2% of the combined entity, and OreCorp shareholders, 17.8%.
The transaction is subject to various approvals, and some of these key approvals is the approval by OreCorp shareholders, the completion of a independent expert report, which concludes that the scheme is in the best interest of OreCorp shareholders, and then approval of Federal Court of Australia and other regulatory approvals as applicable. We do have customary deal protections in place, inclusive of a no due diligence, no talk, and no shop provision. Then there's a break fee applicable of AUD 2.8 million, payable to Silvercorp. Silvercorp also offered a placement in OreCorp of AUD 28 million at AUD 0.40 per share. Post-placement, Silvercorp will then hold 15% of the OreCorp shares on issue, and that will allow us to progress our resettlement activities as planned.
A very positive development in that regard. If we then look at the immediate benefits to the OreCorp shareholders, there's a significant and immediate premium of 41.7% based on the 20-day VWAP. The transaction will introduce significant trading liquidity to OreCorp shareholders. The Silvercorp trades approximately $5 million on a daily basis on the two exchanges combined. It will provide ongoing exposure to future development and operational upside at Nyanzaga within the Silvercorp portfolio. Importantly, it does position Nyanzaga for prompt development due to the strong balance sheet of Silvercorp. I'll hand over to Lon just to cover some benefits to the Silvercorp shareholders. Please, Lon.
That's great. Thank you, Henk, and good morning or good evening to everyone, wherever you might be. Silvercorp's very pleased to be entering into this transaction. We've been determined, and, you know, a key, a key feature for this is that it is accretive on a net asset value basis for us, whether looking at consensus or internal models. It provides immediate geographic and metal diversification to our project portfolio. We're looking for, and we've now found in Nyanzaga, a largely de-risked, low-cost gold project that has key permits in place and has a path to production, where we see the initial production happening in the second half of 2025.
We think this will provide investors, in Silvercorp a rerating opportunity due to the enhanced scale, this diversification in production and asset base, as well as exploration upside, as it has been mentioned, an excellent mining-friendly jurisdiction with great geology. Right at the outset, it, it meaningfully adds to Silvercorp's mineral reserves and resource first. Back to you, Henk.
Thank you, Lon. Just a quick look at the pro forma capitalization of the combined group. Expect to have 218.7 million shares on issue with a market cap of approximately $630 million. That average trading volume of approximately $5 million per day, as I mentioned previously, and then post-transaction cash, net cash of $170 million. Pretty big combined group, and as we said, good trading volume and strong cash position to support the development of Nyanzaga. Lon, if you can take us through the asset portfolio, please.
Yes. Well, as you can see on the slide, on the far left, it shows our inventory in terms of silver. We've made it a focus of building a significant reserve base at our mines that we've been operating. What we see in terms of an addition is obviously in gold, is a significant reserve at Nyanzaga. Looking over on a more broad basis on resources, you can see on the left-hand side, the of the, the right portion of the, the chart, you know, what our inventory is. Of course, we're mixing metals here, because as it relates to Silvercorp, this is being shown in silver equivalent, just looking at silver and gold. A healthy resource base, almost 350 million ounces in terms of silver equivalent.
Also indirectly, we have a 28% stake in another public company, which has a resource, a total resource of 215 million ounces of silver. Looking at the blue-shaded bar, looking at what Nyanzaga adds to the mix, another 3.3 million ounces of gold and resources. This is obviously a significant addition to our mineral resource and reserve portfolio. Next page, please. Continuing on that, you can see in terms of the pie charts on the left-hand side as it relates to silver, that, you know, pro forma resource really entirely comes from Silvercorp at that 280 million ounces.
We have a smaller contribution in contained gold, but then there you can see the 3.3 million ounces added from the OreCorp asset, Nyanzaga. On the right-hand side, showing our production profile, again, this is silver equivalent, millions of ounces, based on our existing mines. You know, we've been looking at consistent growth over the years. On the bottom part, and this is, you know, the reason we're here today, is looking at the significant gold contribution that Nyanzaga can make to our production profile in the bottom right-hand side of that chart.
Just briefly, an overview of Tanzania, located in East Africa. There's been a long history of mining in Tanzania by majors such as Barrick and also AngloGold Ashanti. More recently, BHP, with the investment into Kilembe Nickel of up to $110 million. Also, a large energy project called the East Africa Crude Oil Pipeline, currently under construction through TotalEnergies, and then a potential massive LNG project worth $42 billion being negotiated between Shell plc and the government of Tanzania. A lot of activity happening in Tanzania at present. Also pleased to advise that the Tanzanian power grid is considered a green grid under the EU guidelines. Power being generated predominantly through natural gas and hydro power. Also very strong trade relations between Tanzania and the United States.
The Lake Victoria Goldfields area is a region of world-class gold endowment, produced more than 25 million ounces historically. That region is very well supported by infrastructure and services. Tanzania historically had a long history of gold production of approximately 1.5 million ounces per year, 2015 to 2022. For those that's not that familiar with the Nyanzaga Gold Project, this provides a bit of an, a overview of the project. It's a open pit, underground combination, 84% owned by OreCorp and a 16% free carried interest by the government of Tanzania. We're located in the Lake Victoria Goldfields of Tanzania, so an excellent address for gold endowment. We completed our definitive feasibility study in August last year, so still very current. Project well supported by infrastructure and services.
There's an existing access road that runs past the site. We've got access to water from Lake Victoria and power from the national grid through a 53-km-long transmission line. Very conventional processing facility, no smart technologies. We crush, grind to 75 micron, ultimately for an 88% overall gold recovery. There's a 6% royalty payment payable to the government of Tanzania, and that can reduce to 4% if we refine gold locally. Just key highlights from the definitive feasibility study. Average gold production of 234,000 ounces per year over a 10.7 year life of mine, at a low all-in sustaining cost of $954 per ounce, with a pre-production capital cost of $474 million.
It is a project of significant scale, longevity, and margin, and an excellent addition to the Silvercorp portfolio of projects. Expected to produce per the DFS, almost 200,000 ounces of gold in the first 12 months of production, steadily increasing to nearly 300,000 ounces per year, years four, five, six, and seven. 40 million tons in reserve at +2 g per ton for 2.6 million ounces. The Silvercorp development plan for Nyanzaga is very similar to the OreCorp plan. Firstly, they've put in place the $28 million private placement, as we've mentioned earlier. That will allow us to immediately progress with the resettlement activities.
The Silvercorp open pit will be slightly deeper and therefore slightly larger than what was contemplated in the DFS, and that provides some upside in terms of additional ore to the process plant. Silvercorp currently contemplates a phase development approach, whereby they'll start the open pit first, followed by the underground a couple years thereafter, and also a scaled approach for the process plant. That will be further defined as they progress with the optimization studies over the coming months. Lon, a overview of Silvercorp, please.
Yeah, thanks, Henk. I guess this is for the benefit of OreCorp shareholders not familiar with Silvercorp. We're a Vancouver-based Canadian company, and as mentioned, listed on the TSX and the NYSE American. Current market cap, approximately $518 million. We've been a leading silver producer with 90 million ounces produced to date from two mining operations, and we have a remaining mine life in excess of 15 years. As has been mentioned a few times on the call, strong balance sheet, $200 million in cash and short-term investments. We have no debt, and we have a 28% stake in New Pacific Metals. From a shareholder base, we are widely held, including from some of the well-known global institutional funds.
Also very widely held, with retail, and we have no controlling shareholder. Amongst our peer group, we have industry-leading free cash flow per share growth and operating performance, really stemming from the quality of assets that we've been running. This is also a testament to the management team at the operations, really focused on implementing best practices, disciplined growth, and obviously focusing on higher margin near-term opportunities, and opportunities to grow our resource base. Next slide, please. This quick snapshot in terms of our asset base. The Ying mining district in Henan Province, in China, is our flagship operation. Actually comprised of seven mines that feed into two milling facilities. I'll, I'll speak a bit more on that later. As mentioned, over 90 million ounces of silver produced to date.
The Ying Mine alone has distributed profits to shareholders in excess of $520 million, and again, long mine life. One of the advantages to operating in China is we're close to our customers, that is the smelters. So we've got a favorable payment and processing terms with them, that is clearly an advantage. Similarly, the advantage is on the supply side, looking for reagents and inputs to mining, because these do all come from China, and so we have a very competitive market for these supplies and no need to carry big inventories. We've operated with a capable and disciplined workforce. Stable regulations have been in place for a long time. We're free in terms of our marketing of our concentrates.
There's no set buyers that we are we need to deal with, and if we wanted to, we could export our concentrates, but as previously mentioned, the situation in China is quite favorable. Just as is the case for other Western companies that have chosen China as the manufacturing base, we have a free ability to distribute profits, and that's why China continues to be a center for manufacturing for really the for the world. Next page, please. This slide shows our growth that we've experienced over the years. The top chart shows the growth in our silver inventory.
You can see from the beginning days when the mines got started, we did not have proven and probable reserves, but the extensive drilling, and tunneling, and exploration that we've done have allowed us to build up a very healthy inventory, where we've been running the last several years at approximately 115 million ounces in proven and probable category. I'll just highlight again, this is silver and gold equivalent, and silver does not factor the base metals contribution of these mines. On top of the reserve, we have measured indicated resources, not included in those reserves of approximately 100 million ounces, and then another 126 million ounces of silver in the third category.
The bottom of this chart shows our track record of growth, where we've brought production from under 2 million ounces of silver in the 1st fiscal year, ended March 2007, to where we've been tracking between 6 and 6.5 million ounces of silver a year. Our current fiscal year that we're in right now, we are targeting 7 million ounces. Also on this chart, you can see our very attractive industry-leading all-in sustaining cost profile. For the year ended March 2023, we produced silver at an all-in sustaining cost of $0.97 an ounce, and that is a net of our by-product credits. Next page, please. I mentioned Ying was really the flagship asset. This is a bit of a blow up on it.
The Ying mining district is four mining permits that comprise just under 70 sq kms. Within that, you can see there's the seven individual mines listed there, SGX, TLP, et cetera. They're all underground mines, and they've identified over 300 veins. They deliver ore to 2 mills, with a combined capacity of 3,200 tons per day, and they produce silver, lead, and zinc concentrates, which, as I mentioned, are processed by smelters within a 200 km radius of the mine. Ying alone has produced over 85 million ounces of silver and 1 billion pounds of lead and zinc since operations began in 2006. We've been investing heavily over the years, in terms of effort, but at a very reasonable cost, 2.2 million meters of drilling since inception.
That's what's kept our mine life at a very healthy 15 years, despite having produced for 17 years. We're going to continue this this build program this year. We've already put out a few news releases in the last couple of months, but targeting another 270,000 m of drilling at Ying in this current fiscal year. We've identified and moved on one district consolidation opportunity that we're looking to roll in and as a bit of a satellite hub and spoke operation. We've identified some production expansion initiatives within the existing mining permits down the road. The next page, please. This asset quality is what's allowed us as a company to deliver a very consistent positive adjusted net income on a quarterly basis.
You can see the one exception there is the COVID quarter of 2020, and similarly, on a free cash flow basis, very consistent positive free cash flow. I'll note that calendar Q1 is always the soft quarter due to Chinese New Year. Next page, please. Now, we wouldn't be where we are if we weren't responsible miners. We've instilled a strong culture within the company with respect to responsible mining, and we have programs and elements touching on each of the key components of ESG, environment, ISO certification, good focus on water. Obviously, that's a key button, key point within the mining industry, and so we've targeted to increase our water recycling.
We've also done something very unique at our Ying plant, where we've put in place an aggregate plant to divert up to 1 million tons per year of waste rock by processing it and turning it into aggregate that can be sold on the market. Moving to social. Again, ISO certification, big investments in education locally, also in terms of technology and training for our workforce, both our workers on site and the contractors that we employ. Lastly, for the governance, we've formed a Sustainability Committee of the board and ESG management center, head up by a very capable manager who dealt with all aspects of the operation. Next page, please. Just a quick capital market snapshot. On the left-hand side, you can see our top 10 institutional investors.
These should be some familiar names to investors in the mining space, both some ETFs, quant funds, but then also some traditional long holders in the mining sector. We are currently covered by seven firms in North America, six in Canada, and one in the U.S. At the bottom right, you can see our shareholder breakdown, approximately 32% institutional, 4% insiders, and the balance, approximately 64%, is largely retail investors. I would note that would be mainly Canada and the U.S. We look at this transaction as an opportunity, in addition, due to our pursuit of an ASX listing, to cultivate that retail base in Australia. Obviously, a mining market that we've not spent much time on. Next page, please. Quick snapshot on leadership and the board.
Rui Feng , our chairman and CEO, is a very accomplished geologist. He's made a number of discoveries, but he's also been able to, in the case of Silvercorp Corp, turn those discoveries into profitable mines. Rounding out our board is a mix of geology, technical expertise, as well as accounting and legal background. I think we can skip over the slide, and I'll turn it back over to you guys, Matt and Henk.
Yeah, look, thanks, Lon, and also thanks, Henk, for that quick run-through. look, just quickly there, you've got the timeline. obviously, first court date in around about mid-October. Dispatches scheme booklet shortly thereafter, the meeting mid-November, and then essentially looking to, to wrap this up by the end of November, early December. thank you, and Nathan, I'll come back to you for any questions now.
Thank you. If you'd like to ask a question directly to the company, please use the Raise Hand function within Zoom. Alternatively, you can enter in the Q&A panel within Zoom. Your first question comes from Andrew Oswald at Bell Potter. He asks, "Why is Silvercorp taking a placement in OreCorp as part of the transaction?
Lon, I'll let you take that one.
Well, I think it comes down to the fact that Nyanzaga is ready to go. There's certainly a need for funding to move forward with the resettlement program that's been outlined. We, we certainly, as a company, have targeted and looked for projects that are actionable and that we can move forward with. And this is a getting money into OreCorp, so this resettlement program and some early works on the project that is funded, is obviously a the key reason for that placement.
Further to that, he asked, "Could the 15% shareholding be deemed to be a blocking stake?
Yeah, look, I think, that, that's one view of it, but I think from the way that we take it, the, the need to get the capital into the company in the, the most effective and, and swift manner is, is the way to go. You know, at the end of the day, I think it'll allow us, us to do what we need to do on site. I don't really consider it being necessarily a blocking stake. More, more to move the company forward and maintain momentum.
Thank you. Your next question comes from Brian Beresford at Hartleys. Please go ahead, Brian. I think Brian's just, just left there. Okay, there are no further questions at this time, so I'll now hand back to you, Matthew, for closing remarks.
Look, thank you, everybody, for attending. And the recording on this website will. Sorry, this webinar will be placed on our website and also mailed out. Thank you once again, and we look forward to pushing forward with this transaction and building a diversified precious metals explorer. Thank you. Thanks, Lon.
Thank you.